THE MONEY LAUNDERING REGULATIONS 1993: THEIR IMPLEMENTATION AND IMPLICATIONS FOR SECURITIES HOUSES

Abstract

The international banking and financial system is finding itself in the front line of the war being waged internationally against the money launderers. Traditional concepts of banking secrecy are being undermined as governments struggle to preserve the integrity of the banking system. The war is on a vast scale. The Financial Action Task Force (created in 1989 by the seven major industrial nations and the President of the European Commission) estimated that the amount of money being laundered through the financial system was US$85bn per year. The extent of the problem was recognised in the International Narcotics Control Strategy Report for 1993 which found that eight of the world's major money laundering states are located in Europe. Europe has responded to the growing crisis in the financial sector with the Money Laundering Directive which was due to be fully implemented across the Community by 1st January, 1993. The Directive which applies to credit institutions and financial institutions, including community based branches of non‐Community institutions, reflects a number of key international initiatives and attempts to harmonise the anti‐money laundering legislation of the member states, though with varied success. This paper reviews developments within the UK since the Drug Trafficking Offences Act 1986 which marked the beginning of the Governments campaign to deprive criminals of the fruits of their crime and which has culminated in parts I to IV of the Criminal Justice Act 1993 (CJA 1993), which received Royal Assent on 27th July, 1993. The key money laundering provisions of the CJA 1993 have been introduced piecemeal, but have all been in force since 1st April, 1994. The aim of this paper is to assess the significance and impact of the CJA 1993 and the Money Laundering Regulations upon securities houses' business and to examine related practical and managerial problems encountered as a result of the new legislation. It also questions in particular the role and responsibility of the compliance officer in relation to prevention.

Citation

HAGLAND, G. (1994), "THE MONEY LAUNDERING REGULATIONS 1993: THEIR IMPLEMENTATION AND IMPLICATIONS FOR SECURITIES HOUSES", Journal of Financial Regulation and Compliance, Vol. 2 No. 3, pp. 227-233. https://doi.org/10.1108/eb024811